Canada: Survey Finds Most Canadians Not Saving Enough for Retirement

Most Canadians are concerned they have not saved enough to sustain them through retirement, according to findings from a Conference Board of Canada report. In "A Survey of Non-retirees and Retirees in Canada: Retirement Perspectives and Plans," 60% of those 55-64 years of age, and a little over 40% of those aged 65+ report that they have not put enough money aside, and these numbers are lower for women and those with lower levels of household income. The Board also has published a companion report—"An Employer's Perspective: Retirement Savings and Preparedness"—examining employers' views on the retirement preparedness of their employees, and retirement savings plans and practices among Canadian organizations.

The effect of this is that over one-third of Canadians say they don't know when they'll be able to retire. In addition, the report finds that the average planned age of retirement was 63.2 years of age. Women (83.5%) were more uncertain than men (69.8%) regarding their planned future retirement, and up to 19% of respondents say they will never retire.

Concern over inadequate retirement savings has already led a good number of Canadians to delay their retirement. More than one in five respondents have decided to retire later than their initial plan five years ago. Furthermore, a full 45.6 per cent of respondents say they plan to continue to work part-time or on a contract basis after their official retirement, and the percentage increases with age. About 51 per cent of those aged 45-64, and 60 per cent of those aged 65+ say they will continue working past their official retirement date.

In the report on the perspective of employers, the Board reports that more than 40% of employers believe their employees are too optimistic in their assessment of when they will be able to retire, and close to 50% feel their employees are unaware of how much savings are needed for retirement.

Source: Conference Board of Canada Press Release (October 27, 2014)

Survey: Workers More Optimistic about Retirement, but More Contemplating Phased Retirement

The Transamerica Center for Retirement Studies® has released the results of its annual retirement survey, which found increased optimism among workers around the world about improvements in their local economies, but also noted that many workers envision some kind of phased transition into retirement. According to "The Changing Face of Retirement—The Aegon Retirement Readiness Survey (2014)," just 32% of workers surveyed plan to immediately stop working and fully retire. In the United States, this number is just 24%, while in European nations, which which have histories of compulsory retirement, workers are more likely to plan to stop immediately: for example, , 52% in Spain and 51% in France.

Employment and government policy reforms are needed to facilitate this new approach to retirement, yet change is not catching up with worker demand: only 23 percent of workers say their employers facilitate transitioning from full-time to part-time. Even fewer U.S. workers (21 percent) indicate their workplace policies accommodate the transition. In many cases, change in labor and pension laws, as well as a change in cultural norms, are needed to facilitate implementation of a phased retirement program.

The Aegon Retirement Readiness Survey 2014 is a collaboration between the Transamerica Center for Retirement Studies and Aegon. The survey encompasses 16,000 employees and retirees in 15 countries, with separate country reports available for each of them: Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Sweden, Turkey, the United Kingdom and the United States. These countries were selected on the basis of their distinctive pension systems, as well as their varying demographic and aging trends.

Source: Transamerica Center for Retirement Studies® News Release (May 29, 2014)

Brookings Issues Report on Retirement Trends in 20 Industrialized Countries: Recession Accelerating Delayed Retirements

A report from the Brookings Institution finds that since Great Recession, the trend toward later retirement in industrialized countries has not only continued, but has accelerated. According to "Impact of the Great Recession on Retirement Trends in Industrialized Countries," by Gary Burtless and Barry Bosworth, when the recession began most rich countries were experiencing an increase in labor force participation rates after age 60. In their paper, they examined whether the downturn slowed or reversed the trend toward higher old-age participation rates, using straightforward time series analysis to test for a break in labor force trends after 2007.

Averaging across all 20 countries in our sample, the pace of labor force participation gains has accelerated since the onset of the Great Recession. As noted, the participation rate of 60-64 year-olds increased at an average rate of 0.4 percentage points a year between 1989 and 2007. Between 2007 and 2012 the participation rate in this age group increased an average of 1.5 percentage points a year. In 12 of the 20 countries, the increase in the trend rate of participation change was statistically significant. The participation rate of 65-69 year-olds increased at an average rate of 0.1 percentage points a year between 1989 and 2007. Since 2007 the participation rate in this age group has increased an average of 0.8 percentage points a year across the sample countries. In 13 of the 20 countries, the rise in the trend rate of participation gain was statistically significant. In the oldest age group, 70-74 year-olds, the trend rate of increase in participation rose from 0.05 percentage points a year between 1989 and 2007 to 0.32 percentage points a year after 2007. In 12 of the 19 sample countries the increase in the pace of participation gain among 70-74 year-olds was statistically significant.

While countries that experienced unusually severe downturns, including Ireland and much of southern Europe, represent exceptions to this generalization, the authors conclude that, on the whole, however, the trend toward later retirement in rich countries has not been reversed as a result of the Great Recession.

According to Robert Samuelson, this study suggests that the "We may be witnessing the last gasp of early retirement" and not just in the United States.

Source: Brookings Institution Paper (December 16, 2013)

Canada: Report on Employment Practices and Employability of Mature Workers in Montreal

Community Economic Development and Employability Corporation (CEDEC) has followed up its report on the perceived challenges of mature workers throughout the greater Montreal area with a survey of employers, recruitment agencies and employment service providers to understand their perspectives on the opportunities or challenges associated with hiring a mature worker. Among other things, CEDEC's "Employment Practices and Employability of the Hidden Talent Pool: The Mature Workers Report" suggests that mature workers maintain a positive reputation in the workforce, but also reports that stakeholders mentioned several critical factors affecting English-speaking mature workers’ capacity to find employment.

For example, CEDEC reports that "employers perceive older workers as generally stable, productive, committed, responsible, and highly motivated with strong work ethics." However, it also reports that workers "have difficulty finding employment; they experience various levels of prejudice (ageism) when looking for work and are keenly aware that they are being discriminated against as a result of their age." The factors that CEDEC finds employers citing as barriers to employability include a lack of French language skills, unrealistic salary expectations, lack of technological (mostly computer) skills, a resistance to change and unwillingness to work long hours or overtime.

CEDEC recommends that:

• the government should also be sensitized to the need to hire mature candidates for federal and provincial jobs.
• companies should have concrete strategies for retaining mature employees in their workforce.
• companies should understand and address the motivations and needs of mature employees while seeing the benefits of keeping mature workers on board.

Source: Community Economic Development and Employability Corporation News Release (October 5, 2012)

Canada: Older Workers Less Likely To Participate in Job-Related Training

According to a study from Statistics Canada, older workers in 2008 were significantly less likely to participate in job-related training than their counterparts in the core working-age population. In "Job-related training of older
workers" by Jungwee Park, it is reported that, in the year from July 2007 to June 2008, 45% of workers aged 25 to 54 took at least one job-related course or program, compared with 32% of those aged 55 to 64.

Among the factors linked with significantly lower participation in training among older workers were lower annual income, low educational attainment, temporary employment and work in blue-collar or service jobs. Workers in the private sector, particularly those in goods-producing industries, were also less likely to take job-related training.

However, over the period since 1991 when statistics started being kept, the employer-sponsored training gap between older and core-age workers shrank appreciably. Between 1991 and 2008, the participation rate in employer-supported training among workers aged 55 to 64 more than doubled from 12% to 28%, while the training rate for workers in the core-age group, those from 25 to 54, increased from 29% to 38%.

Source: Statistics Canada The Daily (April 20, 2012)

Canada: Best Employers for Workers over 40

The Globe and Mail has announced its list of Top Employers for Canadians Over 40 for 2012, a group of organizations that are "taking care to keep talent in the house longer with programs and benefits designed for older workers."

The winners--Agriculture Financial Services Corporation, Agrium Inc., BMO Financial Group, Business Development Bank of Canada, Canadian Security Intelligence Service, Dalhousie University, Desjardins Group, EllisDon Corporation, Enbridge Inc., HP Advanced Solutions Inc., Manitoba Hydro, NB Power Holding Corporation, Office of the Auditor General of Canada, SaskTel, and University of Toronto--demonstrated their commitment to older workers through various practics:

stable pensions, particularly defined-benefit programs that have become increasingly rare over the past decade; targeted recruitment of older employees; health plans that extend into retirement with no age limit; opportunities for training and development; flexible working arrangements and time off; recognition of previous experience for vacation entitlements; retirement planning; and phased-in retirement working options and mentorship programs to ensure that skills are passed to younger workers.

At the Top Employers for Canadians Over 40 website, detailed information is provided about each of the employers.

Source: The Globe and Mail (April 3, 2012)

Canada: Human Rights Commission Warns Against Forced Retirements during Transition Period before Ban on Mandatory Retirement Takes Effect

The Canadian Human Rights Commission is cautioning employers on the rights of aging workers. The section of the Human Rights Law that permitted federally regulated employers to impose mandatory retirement in some circumstances was repealed in December 26, 2011, but a one-year transition period was included before it would take effect. The Commission is now telling employers that that delay is "not a license to force aging workers out the door."

According to David Langtry, Acting Chief Commissioner of the Canadian Human Rights Commission, "Forcing someone to retire because of their age clearly contradicts Parliament’s intent, even if a defense in law still appears to be available." The Commission does not have evidence that this is taking place, but the Commission believes it is prudent to caution any employer that might be considering such action to think again. Even before it was repealed, he Federal Court had ruled that that section of the law violated the Charter of Rights and Freedoms and that this breach is not a justifiable limitation of an individual’s right to equality.

For commentary on whether employers are focusing on, or thinking of acting on, this delay, see "Legal loophole allows ageism at work to go unpunished" and "Retirement 'loophole' overblown", both in the Vancouver Sun.

Source: Canadian Human Rights Commission News Release (March 26, 2012)

Book Reviews: "Age, Gender and Work: Small Information Technology Firms in the New Economy"

Kane X. Faucher in the Western News has reviewed The University of British Columbia Press's Age, Gender, and Work: Small Information Technology Firms in the New Economy edited by Julie Ann McMullin, and published in 2011. According to Faucher, this book is a culmination of the Workforce Aging in a New Economy research program (WANE), present findings after seven years of research related to the fact that "the acceleration on the 'information superhighway' will be spotted with accidents, of which we may count those who suffer age and gender discrimination in the IT workplace."

A full complement of case studies, statistics and detailed analysis shines an unflattering light on small IT firms in Canada, but one can hope that rigorous studies such as these may become a foundation for broad initiatives of awareness. With all the concern about obsolescence in the IT industry, it is the old attitudes and assumptions about age and gender that need to be upgraded.

An earlier review in Business New Technology stated that the "volume examines how women and older workers in small IT companies are disproportionately vulnerable to economic uncertainty within their industry," and that "the authors explore how gender and age affect work and workplace culture to produce a fresh contribution to the literature on inequality."

Sources: Western News "Read All Over reviews, March" (March 29, 2012); Business New Technology Review (February 12, 2012)

Canada: Delayed Retirements will Increase and Gradual Changes to Retirement Age Should Follow

According to a report issued the C.D. Howe Institute, over the next 20 years in Canada, there will be "a strong trend towards later retirement by babyboomers as a result of social and economic pressures, without any policy action by government to raise retirement levels." Specifically, “Later Retirement: The Win-Win Solution” estimates that future retirees are likely to work five additional years on average.

Peter Hicks a former federal Assistant Deputy Minister, the report's author, says that this additional work effort will have large, positive economic and fiscal effects, the author reports, reducing pressures on growth, government finances and pension funding. While Hicks says that there is no immediate crisis in public pensions to be addressed, a key reform will be to gradually increase the standard age of pension eligibility in order to bring it more in line with increases in longevity. "For example, it makes no sense to continue with a standard age of 65 for public pension eligibility when the average retirement age will soon be 68."

“The trend towards later retirement will significantly reduce, although not entirely offset, the much-discussed negative macro-economic and labour-market effects of population aging,” says Peter Hicks a former federal Assistant Deputy Minister. “This suggests that compensating policy reforms are still needed but can be less draconian than has often been thought to be necessary.”

The largest problem Hicks perceives may be among a "relatively small number" of people those who cannot work longer and who might be negatively affected by changes in pension eligibility age, but he believes even this can be ameliorated by gradual changes.

Source: C.D. Howe Institute Media Release (March 27, 2012)

Canada: Report that Gen X Workers Getting Squeezed in Multigenerational Workforce

A report finds that baby boomers are making up less of the Canadian workforce than they used to, but it is the Gen Ys who are benefiting more than the Gen X workers. According to the PwC report "Value through your people: Workforce performance in Canadian banking," between 2006 and 2010, the ratio of Baby Boomers to Gen Y employees at Canadian banks shrunk fr0m 6:1 to less than 2:1, while Gen X is by far the largest generational employee group for Canadian banks, comprising a "quiet majority" of between 55% and 60% of the total workforce. Nevertheless, while promotion rates for Gen Ys held steady at close to 20% over a three-year period and Boomers’ promotion rates fell from 5% to 3%, Gen X promotions rates also fell from over 11% to less than 10%.

[Dr. Philip Hunter, a director in PwC’s People and Change practice] believes that Gen Xers are perhaps being "squeezed" by older workers delaying retirement, and younger, more aggressive Gen Ys intent on rising through the ranks quickly. "Other contributing factors may include changes to operating models that favour relationship skills rather than management expertise, and career paths characterized by more stringent promotion criteria at more senior levels, which would disproportionately impact Gen Xers," he says.

Karen Forward, a director in PwC’s Financial Services People and Change practice, suggests that "[b]anks and other industries with multi-generational workforces have to be taking a different approach in thinking about career progression, the formal promotions process and changes to their operating model." In addition, she says that banks need to focus on what expectations they have around each of the generations in the workforce and "to look at collaboration tools, skill transfer programs and address the Gen X 'squeeze' to keep these key employees engaged."

Source: PriceWaterhouseCoopers Press Release (March 15, 2012)

Canada: Government Seeks Employer Views on Retaining and Attracting Older Workers

Alice Wong, Canada's Minister of State (Seniors), has announced that the National Seniors Council’s new priority for 2012 is to seek employers’ views on how to retain and attract older workers, specifically those who are most vulnerable.

"It is important that the Council speak to employers about their views on the challenges and opportunities of an aging workforce," said Minister of State Wong. "Input from the Council’s engagement activities will provide the Government of Canada with valuable information to help shape policies, programs and services that support older Canadians."

Source: Minister of State (Seniors) News Release (March 6, 2011)

Canada: Older Workers Dominating Gains in Labor Market

According to "Older Workers Stampede Into The Labour Market," a special report published by TD Economics, older workers have dominated the gains in the Canadian labor market in recent years. Among other things, the report finds that Canadians aged 60 years and over have accounted for about one-third of all net job gains since the economic recovery began in July 2009, even though they only account for 8% of the total labor force. Some of these gains can be attributable to the fact that many older Canadians are delaying retirement and staying in the workforce longer.

[T]his is not simply a story of those in the 60-65 age range, but also of those older than 70. Employment for these individuals has surged by 55,000 positions since then (a 37% gain). Even more surprising is that almost 100,000 net jobs were added in the 60+ age group at the depth of the recession. By comparison, their younger counterparts (ages 59 and under) recorded well over 500,000 net losses over the same period.

TD Economics also suggests that some of the growing preference for older workers reflects their tendency to favor less rigid work arrangements, since it is estimated that upwards of one-third of all work arrangements are now "non-standard"--including part-time and temporary work, and self-employment.

Source: TD Economics Special Report (February 23, 2012)

Canada: Economists Rekindle Debate about Raising Retirement Age to 70

Following up on recently published research, two economists from McMaster University economists are suggesting that demographic changes require raising the age of eligibility for the Canada Pension Plan to 70. According to press reports, future generations will "suffer the financial consequences" unless these changes are implemented, based on research by Byron G. Spencer and Frank T. Denton, published in 2011 ("Age of Pension Eligibility, Gains in Life Expectancy, and Social Policy").

As presented in the paper:

Canadians are living longer and retiring younger. When combined with the aging of the baby boom generation, that means that the “inactive” portion of the population is increasing and there are concerns about possibly large increases in the burden of support on those who are younger. We model the impact of continued future gains in life expectancy on the size of the population that receives public pension benefits. We pay special attention to possible increases in the age of eligibility and the pension contribution rate that would maintain the publicly financed component of the retirement income security system.

With no changes, by 2035, there will be only two people in the workforce for each person over the age of 65, instead of the four-to-one ratio currently existing, and that would require the contribution rate for CPP to double, from 6.4% to 12.3%.

Source: Toronto Star "Too selfish to retire? Economists urge pushing pension age to 70" (January 26, 2012); Hamilton Spectator "Raise pension age to 70: Mac study" (January 26, 2012)

Canadian Chamber of Commerce Calls for Improving Incentives for Older Workers Staying on the Job

The Canadian Chamber of Commerce has issued a discussion paper, reinforcing the argument that retaining older workers in the workforce is part of the solution to avoid the skills crisis Canada is on the verge of experiencing, and calling for the removal of disincentives that discourage seniors from working. In "Incenting Seniors to Continue Working," the Chamber set the table for changes as follows:

Seniors represent a constituency that needs to be better integrated into the workforce. They possess the essential skills employers need. Many do want to continue working and view work as an important part of their life balance. Yet, in 2010, only a small percentage of individuals 55 years of age and over were in the labour force.

Accordingly, the paper pinpoints six key areas to be addressed in order to encourage the ongoing participation of seniors in the workforce:

1. pension reform;
2. tax reform;
3. flexibilty in the workplace;
4. innovative tools dedicated to the hiring of seniors, including online guides and websites;
5. lifelong learning and training; and
6. advancing a new business culture aimed first at retaining, rather than replacing, senior workers.

Source: Canadian Chamber of Commerce News Release (December 1, 2011)

Canada: Study Finds that Delayed Retirement Has Become a Trend

A study by Statistics Canada finds that older workers have been increasingly delaying their retirement since the mid-1990s. This is consistent with the increase in the employment rate of older Canadians that began about the same time. Thus, a 50-year-old worker in 2008 could expect to stay in the labour force 3.5 years longer than in the mid-1990.

In an article--"Delayed retirement: A new trend?" by Yves Carrière and Diane Galarneau--published in Perspectives on Labour and Income (Vol. 23, no. 4), the authors conclude that:

Delayed retirement could alleviate some of the economic challenges of population aging. However, hours of work must be considered, since a drop in average weekly hours could partly offset the impact of an increased expected work life on annual hours and economic growth. In fact, the average work week for those 55 and over in 2010 was indeed 1 hour shorter than in 1997.

Source: Statistics Canada The Daily (October 26, 2011)

Canada: Mining Industry Using Dual-Career Paths To Retain Knowledge Workers

According to a report issued by the Mining Industry Human Resources Council (MIHR), in partnership with the Canada Mining Innovation Council, Canadian mining companies are adopting dual-career development paths--that is, the creation of alternate advancement paths for technical and managerial employees--as a means to retain knowledge workers. In addition, "Making the Grade: Human Resources Challenges and Opportunities for Knowledge Workers in Canadian Mining" finds, among other things that a continued decline in fertility rates, coupled with an aging population, means that highly skilled immigrants will grow in importance to organizations looking to fill knowledge worker skills gaps.

Furthermore, the study finds that "employer outreach to younger audiences is seen as one key to future attraction of knowledge workers. The number of people connected through social media is increasing at an exponential rate, particularly among younger generations. Organizations are increasingly turning to social-media campaigns for recruitment, awareness and branding opportunities."

According to "Unearthing Possibilities: Human Resources Challenges and Opportunities in the Canadian Mineral Exploration Sector," a second report issued by the MIHR, the mining sector:

is not immune to the broad trend of an aging workforce—with 16 per cent of the workforce over age 55. Furthermore—and of particular importance—the sector has a shortage of workers in the middle parts of their career (aged 35 to 44), suggesting challenges with mid-career attrition.

Thus, among other things, it finds that programs and initiatives to engage and retain the aging workforce are also important for the future success of the exploration sector. .

Source: Mining Industry Human Resources Council News Release (October 14, 2011)

Canada: Survey Finds Canadians Needing To Delay Retirement Because of Lack of Savings

According to a survey conducted by the Canadian Payroll Association, 40% of Canadians said they now expect to retire later than they previously planned, and the primary reason (cited by 40%) was "I'm not saving enough money for retirement." Furthermore, the CPA survey found 57% of those surveyed said that they would be in financial difficulty if their pay was delayed by even a week.

Almost three-quarters of employees (74%) said they have saved less than a quarter of their retirement savings goal. “This is particularly troubling when you realize that 71% of the respondents are over the age of 35, with the bulk in their main saving years between 35 and 54,” states Dianne Winsor, CPM, Chairman of the CPA.

Another significant finding – half (50%) of employees across the country reported that they are saving 5% or less of their net pay. This is well below the 10% of net pay that financial planning experts generally recommend as a retirement savings rate.

Source: Canadian Payroll Association News Release (September 8, 2011)

Canada Gets High Marks for Responding to Aging Workforce

According to a new research report by Schroders, Canada has been facing up to the economic challenges of an aging population, but will still need to do more. The authors--Virginie Maisonneuve, Head of Global Equities at Schroders, and Katherine Davidson--conclude that Canada has been quick to recognize its impending demographic transition and adjust its institutions accordingly. The only ways to break the relationship between reduced labor supply as baby boomers retire and lower GDP growth is "to increase immigration or raise participation rates, especially of older workers" and Canada is doing just that.

The report says, however, that future growth will have to be driven by improvements in labor productivity and Canada is expected to face the highest age-related spending of any OECD member state. Here, too, Canada looks to be in good shape, with a strong record in controlling costs. For example, it spends 10% of GDP on health care versus the US at 16%, and it relies less on the state for pension provision with private pensions and other investments providing over 40% of retirement income, compared to the OECD average of 20%.

Source: PR Newswire News Release (July 21, 2011)

Canadian and irish Researchers Find that Older, Rural Workers Satisfied with Non-standard Work

Researchers studying urban and rural workers in Newfoundland, Ontario and Ireland report that the non-standard work often called a "dead-end job" has little impact on the happiness of older rural workers. Of all older (40 plus) rural workers, a majority were found to hold jobs other than year-round, full-time positions--including long- and short-distance commuters, part-time, seasonal, self-employed, early retirees--and generally these workers report being satisfied with their work-life balance, and even those supposedly holding "jobs of moderate or lower quality tend to make the best of their jobs and focus more on their non-working lives."

The researchers were led by Gordon Cooke, an associate professor at Memorial University of Newfoundland, and they presented in two papers at the Congress of the Humanities and Social Sciences, one by Sara Man of the University of Guelph and one co-presented with Deidre Hutchings, MBA student at Memorial University of Newfoundland. According to an article in the Vancouver Sun:

Using a massive Statistics Canada employment survey database including 25,000 employees in 6,000 workplaces, they found that just 6.8 per cent of 40-plus workers hold unskilled jobs with low pay and benefits. Seventeen per cent work in jobs with non-standard hours, but they have high levels of job satisfaction, ranking themselves an average of 3.3 out of 4.

Sources: CNW Group Press Release (June 3, 2011); Vancouver Sun "Older, rural workers OK with non-standard jobs, research shows" (June 5, 2011)

Canada: Apparel Industry Confronts Aging Workforce

The Canadian Apparel Human Resources Council (AHRC) has released the findings and recommendations concerning the aging of both management and staffing in the apparel industry.

Among the issues discussed in "Pressing ahead: Canada’s transforming apparel industry," the apparel industry has to deal with a lack of succession plans for small businesses with aging owners and a looming shortage of production workers many of whom are nearing retirement age--7,000 of these workers could retire soon and that there are virtually no sources of supply for new production workers.

Sources: Apparel Human Resources Council Press Release (March 31, 2011); Montreal Gazette "Apparel companies face labour hurdles" (March 31, 2011)